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Questions › DSE › DSE 2008 › Q45
2 marksMacroeconomics › Classical macroeconomics › The classical labour market and employmentHardabout 4 min

DSE 2008 Question 45: Classical macroeconomics

Let α=12\alpha=\tfrac12α=21​, β=23\beta=\tfrac23β=32​, K‾=10\overline{K}=10K=10, L‾=10\overline{L}=10L=10, A=4A=4A=4. Given these parameter values, the unique non-negative equilibrium value of the real wage rate that clears the labour market is

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Let α=1/2, β=2/3, K̅=10, L̅=10, A=4. Given these parameter values, the unique non-negative equilibrium value of the real wage rate that clears the labour market is (A) W/P=[1/2√2]^(1/2) (B) W/P=[(1+√2)/2]^(1/2) (C) W/P=[2-2√2]^(1/2) (D) W/P=[2+2√2]^(1/2)

Also written as: Let alpha=1/2, beta=2/3, K_bar=10, L_bar=10, A=4. Given these parameter values, the unique non-negative equilibrium value of the real wage rate that clears the labour market is

Classical macroeconomics has come up 35 times in 7 exams since 2008.

What this question tests

This question is on The classical labour market and employment, part of Classical macroeconomics in Macroeconomics.

How flexible wages clear the labour market and fix employment and output.

TestStop has 12 past-paper questions on this subtopic; the nearest in year are below.

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Question from the DSE 2008 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.